The Delaware Economic and Financial Advisory Council (DEFAC) held their May meeting with one more in June before the General Assembly passes the state’s Fiscal Year 2021 budget. While projections and estimates seem to change by the minute, there are a few things to be watching over the summer and into the fall related to economic recovery and what the impact to state expenditures will be in 2021.

Medicaid Growth: Delawareans eligible for Medicaid increased by 3,000 to a total of 238,000. Financial increases from the federal government are expected to terminate at the end of 2020, so tracking the number of newly eligible Medicaid participants who remain eligible as the economy improves will be an important marker. Even if those 3,000 individuals transition off of Medicaid, 25 percent of Delawareans will still be receiving Medicaid. If you add in state employees, their families, and Medicare almost half of Delaware’s citizens are receiving some measure of publicly subsidized health care. These costs are expected to rise.

Unemployment: On May 28, just shy of the Phase 1 re-opening, Delaware unemployment claims surpassed 100,000. As reported by DEFAC, 95,824 claims were filed between March 15 and May 15, with $234,783,265 in unemployment insurance benefits paid. The state share of the cost was $91,932,638. It is expected that Delaware’s unemployment insurance fund will dry up in June, necessitating borrowing from the federal government for future payments. Some of the CARES Act dollars allocated to the state will be shifted to help cover unemployment costs, lessening the amount to be borrowed, but any borrowing will have an adverse impact on next year’s overall spending. It also remains to be seen what unemployment insurance rate increases businesses will face in October.

Long Term Impacts on Traditional Revenue Streams: Long term uncertainty remains about the impact to residential and commercial real estate, the realty transfer tax, and the subsequent impact on those revenue streams. Governor Carney was prudent to classify construction as essential to not only ward off additional unemployment claims, but to keep up with the demand for new homes, road improvements, and new infrastructure.

As businesses adapt to large swaths of employees working from home, in many cases working more productively, significant changes to the dedicated physical space businesses require could be on the horizon. Downstream impacts, such as Wilmington’s wage tax, will require creative measures to insure solvency.

Corporate income tax and personal income tax filings are both predicted to take a significant hit next year. Personal income tax is the top revenue stream to the state, and while so far high wage workers have not suffered significant job losses, it will be interesting to see what the current 40% layoffs in hospitality workers translates into when federal unemployment ends in July.

All told, there remains much uncertainty—whether there will be a resurgence of COVID-19 in the fall and what that economic impact will look like, how changes made during this time related to how employees work will impact real estate, office environments, the work-from-home movement, and how all of these issues, and others, will further impact Delaware’s budget process.]]>Thu, 09 Apr 2020 17:54:21 GMThttps://www.dscc.com/legislativejournal/dscclocalswagchallenge-recapApril 7 was Great American Buy Local Day to support local businesses, the communities they serve, and the millions of people they employ. Even though Delawareans must socially distance themselves right now, there are still ways to support local businesses by shopping online, buying gift cards, utilizing services of essential companies, referring a friend, or leaving a positive review online. To join in on this movement, the State Chamber created the #DSCCLocalSwagChallenge to encourage Delawareans to give local businesses online love!

I thought I would be fun to show support for local businesses through the Delaware State Chamber local swag challenge! I’m tagging one of my favorite travel mugs from the 2019 Easterseals Delaware & Maryland's Eastern Shore Volleyball Challenge. This time last year the Leadership Delaware Class of 2019 was nursing a few injuries from the tournament while basking in the glow of knowing we’d just raised the most of any previous class and had raised the most of any group that year. Can’t wait to see the Class of 2020 rise to the challenge! #exceptionaleleven #LDI #tagyourswag #DSCCLocalSwagChallenge

The spread of and reaction to COVID-19 has the world changing minute by minute, and the business community has come together in these uncertain times to focus not only on keeping their doors open and their employees paid but also continuing to be a helpful presence in their communities.

It’s not an understatement to say we are currently navigating in uncharted waters. In an effort to provide some stability for employers during these times, the State Chamber of Commerce, along with other chambers across the state, industry associations and other business-focused groups are committed to finding ways for employers to keep their lights on and continue to operate.

Some of these recommendations have already been implemented as of mid-March. Currently the waiting period to file for unemployment benefits has been reduced to seven days. Workers are now allowed to supplement their income with part-time employment while still collecting benefits. Tipped employees are not being classified as minimum wage as long as they claim their tips, increasing them to a higher unemployment benefit rate. Alcohol regulations have been relaxed to increase sales at local restaurants. Zero percent loans have been made available for businesses forced to close under the State of Emergency order.

As we continue to see fallout from this crisis, there a few more areas where targeted government action could have very positive impacts for struggling businesses. These include:

Additional changes needed to unemployment insurance:

Do not penalize employers when unemployment claims are made. Modification scores should be frozen during this time so businesses who are forced to lay off, especially those closed by executive order, are not further negatively impacted.

Increase eligible amounts from $400 to $600 per week.

Many businesses have limited access to cash on hand. We should explore ways to keep cash in the hands of businesses through temporary exemptions from gross receipts and payroll taxes. Zero interest bridge loans and small business loans should be explored as a way to infuse businesses with cash.

These unique circumstances demand unique solutions. Other recommendations being floated include the state utilizing its top bond rating to borrow funds necessary to fully fund the unemployment insurance trust fund, to provide employers with rent relief, and to cover payroll taxes paid by employers. As mentioned earlier, access to capital remains a critical component for businesses looking to reopen, to remain open, and stay solvent during these difficult times. The ability for the state to provide this safety net is a much-needed service toward its maintenance of a strong bonding rating was designed to achieve.

As we look forward to the eventual reconvening of the General Assembly, the business community’s message is clear—a plea for action only on critical legislation. Budget, Bond, and Grants-in-Aid bills are a priority, as are any bills providing relief to employers, employees, and at-risk citizens. During these uncertain times legislative focus should remain on how we will recover as a community.

The impact of the COVID-19 crisis has the potential to dwarf the economic impact of the Great Recession. In 2008-2009, extraordinary measures were undertaken by the Markell Administration and the General Assembly to keep Delaware going, and just a few short years ago we faced a $350 million budget deficit that also took extraordinary measures to overcome. With the help and planning of the Carney Administration and the General Assembly, Delaware can position itself to come out of this crisis better positioned for the future.]]>Thu, 12 Mar 2020 15:35:11 GMThttps://www.dscc.com/legislativejournal/messages-from-healthcare-leaders-in-delaware-on-covid-19Delaware's first cases of coronavirus were confirmed this week. As businesses and nonprofits in the state respond to this information, we asked the state's healthcare leaders to provide insight and advice on how to make educated decisions as we move forward.​

This coronavirus is new and we don’t know all that we’d like to and need to know. Since this is a rapidly changing event, the best advice is to visit the Delaware Division of Public Health's 'DE Update on Coronavirus' for the latest news and advice.

Businesses are being asked to plan. This includes understanding the latest advice on gatherings and travel as well as planning for at-home deployment of employees. At our association, we’ve run through our colleagues' home IT links to ensure they are functional and will allow communication with our server as well as verified the number of callers we can handle remotely should the need arise for tele-meetings of our committees.

Since this virus is new I can not stress enough the importance of keeping informed.

Wayne SmithPresident & CEO, Delaware Healthcare Association

As the coronavirus situation continues to evolve, Highmark Delaware is monitoring it closely and we urge our members, partners and employees, to exercise educated caution. Normal preventive actions like washing your hands thoroughly with soap and water, staying home if you are sick, and avoiding touching your eyes, nose and mouth, can go a long way in stopping the spread of illness. Highmark has created a website dedicated to information about the disease, as well as suggestions for protecting your health and the health of those around you. Visit faqs.discoverhighmark.com

Nick MorielloPresident, Highmark Blue Cross Blue Shield Delaware

"At Saint Francis, we encourage our community to follow CDC and Delaware Department of Health guidance: Stay home if you are sick; Cover your nose and mouth when you cough and sneeze; Wash your hands; Avoid touching your eyes, nose and mouth; Disinfect surfaces and objects; and avoid large gatherings. These actions will can slow the spread of the COVID-19 coronavirus, helping to ensure that the sickest and most vulnerable members of our community continue to have access to critical care."

Dan SinnottPresident & CEO, Saint Francis Healthcare

how to prevent spreading covid-19:

These are challenging times for businesses of every kind and from every corner of our state. While working remotely via a laptop or other means is an option for some, it is not an option for many others. Agriculture, food manufacturers, building contractors, utility companies, industrial production sites, first responders, municipal services and countless others need people in place in order to get work done. And, let’s not forget retailers or restaurateurs that need foot traffic, or the hospitality, lodging or entertainment businesses that need guests.

Mike QuarantaPresident, Delaware State Chamber of Commerce

how can you support local businesses

Shop locally by visiting stores online

Buy gift cards to your favorite restaurant now, treat yourself later

If you have tickets to a live show or concert, consider donating the money back to the theater or venue instead of asking for a refund

This week Governor Carney released his 2021 Recommended Budget. Some items were already covered in his State of the State, including a $50 million investment in clean water, and $50 million to build a new school in Wilmington and upgrade existing city schools.

The Governor also reiterated his commitment to holding budget growth with an eye on the future by keeping growth below the DEFAC benchmark (under 4% for this year). While our economy is currently strong, the budget continues to set aside money for the future ($161 million in total—just under $40 million this year) and using one-time money for one-time projects. The bond bill appropriation is the highest ever, with over $892 million allocated to capital improvements.

Other items include:• $180+ million in school construction/deferred maintenance around the state• $20 million to the strategic fund• $10 million transportation infrastructure fund, which the Chamber supported enabling this legislation• $10 million to graduation lab space for innovators at UD/Experimental Station to move into as they grow from start-ups to needing lab space• $10 million site readiness, which is based on Chamber-backed “Ready in 6” permitting reform provisions

Also this week were a pair of bills sponsored by Rep. Baumbach, and he’s batting .500 as far as State Chamber support goes. The first, HS1 for HB80 modifies his Earned Income Tax Credit legislation the Chamber has supported in the past as a way to provide low-wage earners a refundable tax credit. This approach has proven to put money in the pockets of workers, without the associated job losses of a minimum wage increase. The bill has been released from committee and now awaits a House vote. The Governor has indicated he is inclined to sign the bill if passed.

The other bill, HB288, would enter Delaware into a multi-state compact wherein Delaware would be precluded from offering incentives to attract businesses to Delaware currently located in a compact state. This puts Delaware at a direct disadvantage with surrounding states, and municipalities such as NYC that will continue to be able to utilize incentives to attract businesses to their locations.

The General Assembly will be off for the next 5 weeks as the Joint Finance Committee and Bond Committee meet to start marking up the 2021 budget. ]]>Thu, 23 Jan 2020 20:32:41 GMThttps://www.dscc.com/legislativejournal/this-week-in-dover5110490by ​James DeChene, Armitage DeChene & Associates

The big news this week for State Chamber members was Governor Carney and House Majority Leader Longhurst announcing a $50 million investment in water infrastructure projects in Delaware. From storm water, waste water, drinking water and flood abatement, these issues will see over $100 million in funding, once matching funds are added. The State Chamber has pushed for a Water Infrastructure bill like this for a number of years. This level of funding will cover the next 5-10 years, instead of having to go back for money year after year. With longevity like this, projects can be bid on/completed in a thoughtful way. This also creates the ability to lump projects together to see more value for money being spent and more efficient, larger outcomes. The State Chamber sees this as how infrastructure money should be used and a great use of one-time money by the Carney Administration. Moreover, this bill not only addresses drinking water in areas like Ellendale and Blades but also flooding downstate and stormwater remediation upstate.

The Governor also announced plans to create a One Stop website for citizens where they can buy park passes, register to vote and more, much like the recently created One Stop site for businesses. He is also creating a Site Readiness Fund to help quickly convert properties to meet the needs of prospective employers and expanding the EDGE grant program to support small business.

Other items of note include a proposed renewable portfolio standard of using 40% renewable energy by 2035, and planting a million new trees across the state.

A reminder that next week will see the budget proposed by the Governor, a starting point for the General Assembly. The Joint Finance Committee will be meeting later this year to write their budget and it remains to be seen what of the Administration’s proposals will make the cut.

More on the proposed budget and what it contains next week.]]>Thu, 16 Jan 2020 18:55:51 GMThttps://www.dscc.com/legislativejournal/i-need-an-electrician5176900Let’s retrain Delaware’s most vulnerable workersby Michael J. Quaranta

Exasperated, I yelled out, “I’m calling an electrician!” because my frustration level reached a boiling point. While I can handle simple electrical tasks, I’m not interested in hurting myself or causing a real problem by taking on a project beyond my “happy homeowner” skill-level.

I’m a baby boomer. As I observe many in my generation entering their retirement years, I’ve noticed critical job shortages developing, and getting an electrician to my home was a real chore. This shortage is likely the result of a generation regularly extolling the benefits of a college degree. Personally, I am living proof that a university education has its advantages. However, our years of zealous promotion of four-year degrees came at the expense of the building trades and other very important professions.

For years, people advocated for a higher minimum wage for workers in entry-level or low-skilled jobs. They argue that those low wages are not enough to sustain a family, and in 2020, they’re not wrong. However, these jobs and their minimum wages were never intended to do that; these were entry-level, part-time positions that were a supplement to your other income or a way to develop a work history as a new entrant in the job market. Changes in our economy and worldwide competition have impacted the workforce and created a labor market where some people are simply stuck in low-skill and low-paying jobs.

The solution cannot be to artificially raise the minimum wage to $15 per hour. Doing so will increase labor costs and accelerate the time in which businesses turn to automation and technology and permanently eliminate low-skill jobs. We worry that youth unemployment will rise because older, more experienced workers will compete for similar, higher starting pay, resulting in our youth losing out on valuable opportunities to gain work experience.

Wage escalation is another real concern. A long-term employee, presently making that same $15 per hour as a new hire, will demand a wage boost because their tenure, experience, reliability and performance is sure to have a value higher than a new employee. This escalation of wage increases will force many businesses to make hard, personnel decisions they might not otherwise have to make.

Some businesses may sell goods or services in a very competitive marketplace where charging more for what they sell, to cover increased labor costs, is not an option. Even if it were an option and prices go up for everybody, the very people who benefit by a higher, minimum wage will also be charged more for goods and services. Unfortunately, higher prices would negate any economic lift that may have come from higher wages.

The real solution is to train people for higher wage, in-demand jobs where growing vacancies exist. These jobs typically pay wages and benefits higher than what’s proposed and possess long-term career opportunities with even greater rewards. We need skilled tradesmen and women, health care workers to assist a growing and aging state population, and information technology specialists to manage the tech at our hospitals, banks and on manufacturing floors.

There is a significant population in Delaware of underemployed workers that require additional skills training in order to improve their career trajectory. In conversations with businesses and training providers, we believe a model exists for high-quality training with positive results.

The State Chamber is proposing a multi-million-dollar investment by the State that would cover training costs for several hundred trainees per year and provide for living expenses while someone is in school. This support removes the barrier most underemployed believe is standing between where they are and where they hope to be.

Specifically, an eight-hour day, five-day week approach allows for a compressed schedule to ensure graduates make a transition quickly and efficiently. We worry that without focusing on this problem now, thousands of Delawareans will go from underemployed to unemployable in a matter of 7 to 10 years.

This is a classic ‘win-win’ proposition. As taxpayers, the increase in Personal Income Tax (PIT) people pay as they earn higher wages, returns more of our investment over time. The diminished need for social services, and hopefully the avoidance of the kind of trouble frequently associated with unemployment or underemployment, benefits us all.

When the next recession hits, some economists believe it will last longer than typical and could impact Delawareans without marketable skills for years. Knowing this, we need to take concrete steps to train as many underemployed people as quickly as we can or risk that they become unemployable. Doing so will make a lasting change in their lives and be of benefit to us all. ​]]>Thu, 16 Jan 2020 18:19:41 GMThttps://www.dscc.com/legislativejournal/this-week-in-dover8907070by James DeChene

This week saw the return of the General Assembly into the second leg of the 150th General Assembly. As a reminder, all bills that were active last year, remain so, meaning bills like raising the minimum wage and legalizing recreational marijuana are still alive and kicking.

Speaking of which, this week also saw a rally at Leg Hall by members of SEIU, a service employees union, calling for raising Delaware’s minimum wage to $15 per hour. As you may recall, the State Chamber has engaged on this issue highlighting the need for investments in skills training for low-skilled workers to retrain them into careers with growth potential. It has been, and remains, the policy of the State Chamber that arbitrary increases to the minimum wage place pressures on those businesses that can’t afford to raise wages, and ultimately hurt those workers by forcing companies to reduce hours or reduce personnel. The State Chamber looks forward to working with members of the General Assembly and the Administration to secure training funding to help change the lives of Delawareans for the better. More on that to come.

Next week the Governor will give his State of the State speech, with his recommended budget to come the week after.]]>Thu, 26 Dec 2019 14:45:34 GMThttps://www.dscc.com/legislativejournal/lets-give-delawareans-a-hand-up-instead-of-a-handout by Michael J. Quaranta

​This past year was one that started with a great deal of uncertainty as the Delaware General Assembly began work in January 2019 with one of the largest membership changes it had experienced in decades. No one quite knew what to expect from these newly elected officials or how they would vote on issues critical to the business community. As winter ended and the weeks rolled on towards the end of the legislative session, it became clear the General Assembly made pragmatic choices and the business community fared reasonably well. Our Developing Delaware event in October 2018 yielded an important work product which is now known as “Delaware in 6.” With strong interest in this effort by Governor Carney, the State Chamber in partnership with Association of Chambers of Commerce and others, we drew attention to the amount of time it takes for permitting applications to be completed. The firm, KPMG is finishing a study about permitting approvals in Delaware. This will help guide policymakers in making necessary changes if we are to compress the time it takes to finish the permitting process and compete with surrounding states and localities.

Fast forward to the 2019 Developing Delaware conference just a few months ago, and this event focused on workforce development. We need to find ways to retrain under-employed Delawareans. The five days a week, eight hours a day programs to aid these people and prospective employers, already exist. However, help is needed to keep people afloat while going through these retraining classes. If we move people fromlow-skill, low-wage jobs to employment with a future and wages that pay more than $15 per hour, we can change people and their families. How great would it be for a ten-year-old to see her mom or dadgo back to school for twenty weeks? How great would it be to change the orbit a family is presently on, and give them hope and the potential for a much-improved standard of living? Employers need workers withbasic skill sets. We believe that connecting these dots is a win-win for employers and potential employees. Yes, a challenging set of details exist before making this a reality, but a “hand up” is sustaining and betterthan a “handout.” And, if retrained Delawareans are upskilled and earn better wages, the taxpayer has his money returned in the form of higher income taxes, and the absence of transfer payments to people due totheir previously low-income status.

​We have historically low unemployment now, and we need to retraineveryone willing to enter programs that will give employers and employees a brighter future. These and other priorities will be our focus in 2020. Onward!]]>Thu, 05 Sep 2019 18:19:15 GMThttps://www.dscc.com/legislativejournal/back-to-schoolThis week was back to school for most Delaware students, though if you’re like me you had one that started pre-Labor Day. The Sussex County native in me still chafes at such an early start, but you play the hand you’re dealt. In the fall, the Chamber is part of two school-related events that members can take advantage of.

First is Delaware Principal for a Day. The week of October 21 puts business leaders in schools all around the state shadowing the principal of a local school for a day. It’s an excellent opportunity for schools to highlight successful programs, to provide real life examples of the breadth and scope of students and how their educational needs are being met, and it allows for schools to hear what skills businesses are looking for in the employees of the future. If you’d like to participate, or to learn more about the program, contact Kelly Basile.

The other school-related event in October is Manufacturing Week. The State Chamber is also the National Association of Manufacturers state affiliate, and NAM celebrates Manufacturing Day the first Friday in October. We extend that to a full week here in Delaware. Delaware manufacturers are encouraged to bring students from local middle and high schools into their facilities for tours to learn more about manufacturing as a career. In addition, the Governor signs a proclamation designating manufacturing week and the Congressional delegation has conducted tours in the past. For more info on Manufacturing Week, you can contact Cheryl Corn.]]>